European Central Bank Press conference comparison — 2 February 2023 vs 4 May 2023
This European Central Bank press conference comparison covers 2 February 2023 and 4 May 2023. Overall, the newer document was more dovish. The ECB delivered a smaller 25bp hike in May 2023 compared to the prior 50bp hike with a pre-announced 50bp for March, marking a dovish shift in pace even as rhetoric on further tightening remains hawkish. The next decision likely to deliver another 25bp hike or pause depending on incoming data, with rates set to remain restrictive for an extended period.
What changed
More dovish. The ECB delivered a smaller 25bp hike in May 2023 compared to the prior 50bp hike with a pre-announced 50bp for March, marking a dovish shift in pace even as rhetoric on further tightening remains hawkish. The next decision likely to deliver another 25bp hike or pause depending on incoming data, with rates set to remain restrictive for an extended period.
- Inflation — Little changed. Inflation assessment remains hawkish with continued emphasis on underlying pressures and upside risks, but no material escalation in rhetoric.
- Labour Market — Little changed. Labour market characterisation remains tight with new historical low unemployment and wage pressure warnings, consistent with prior tone.
- Rate Path — More dovish. The pace of tightening slows from pre-announced 50bp to actual 25bp, and the forward guidance becomes less explicit on near-term action, though still hawkish on ultimate destination.
- Balance Sheet — Little changed. Quantitative tightening pace unchanged at around €25bn/month, with no new signals on balance sheet policy.
Key wording
Accordingly, the Governing Council today decided to raise the three key ECB interest rates by 50 basis points and we expect to raise them further.
In view of the underlying inflation pressures, we intend to raise interest rates by another 50 basis points at our next monetary policy meeting in March and we will then evaluate the subsequent path of our monetary policy.
Keeping interest rates at restrictive levels will over time reduce inflation by dampening demand and will also guard against the risk of a persistent upward shift in inflation expectations.
The unemployment rate remained at its historical low of 6.6 per cent in December 2022.
Price pressures remain strong, partly because high energy costs are spreading throughout the economy.
we today decided to raise the three key ECB interest rates by 50 basis points and we expect to raise them further.
the Governing Council today decided to raise the three key ECB interest rates by 25 basis points.
At the same time, our past rate increases are being transmitted forcefully to euro area financing and monetary conditions, while the lags and strength of transmission to the real economy remain uncertain.
Our future decisions will ensure that the policy rates will be brought to levels sufficiently restrictive to achieve a timely return of inflation to our two per cent medium-term target and will be kept at those levels for as long as necessary.
the unemployment rate falling to a new historical low of 6.5 per cent in March.
The inflation outlook continues to be too high for too long.
we are not pausing. Under the present circumstances and based on what we have, which is the baseline of March, we know that we have more ground to cover.
Official documents
Background reading
Related
2 February 2023 press conference · 4 May 2023 press conference · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology
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